Banks are derisking balance sheets, cutting crypto, exclusive survey finds

Key insight: Banks are derisking across their balance sheets, with digital assets leading the way according to research from American Banker. 

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What's at stake: Research suggests banks prefer regulatory clarity over deregulation. 

Forward look: While current policy changes are often framed as relief for banks, it doesn't necessarily create a simpler environment for the financial services industry.

Banks are reducing risk across their balance sheets and crypto is a prime target, according to a proprietary American Banker Market Intelligence survey of risk and compliance professionals at banks and credit unions. 

The data revealed that six-in-ten financial institutions are scaling back risk exposure in at least one asset class. Digital assets led the retreat with 26% of institutions derisking. 

The findings also indicate that banker caution stems from a preference for clear, predictable regulatory guardrails over leniency, a dynamic most acute in digital assets, where shifting rules compound existing market volatility. The majority of bankers – 80% – agree that a stable, predictable regulatory environment is best for the long-term health of U.S. banking; 56% strongly agreed.